10 credit rating myths (& the true facts)

There are a lot of myths surrounding credit scores which at the very least confuse consumers but at the worst could inadvertently damage their chances of getting accepted for credit. Below I dispel 10 of the worst:

1. You can't see your credit report, as only lenders have access to it - this is not true at all. Anyone can obtain a copy of their own credit report online via one of the many credit agencies. Here I explain how to check your credit report for FREE!
2. You have a single credit score - probably the biggest myth is that there is one magic number, your credit score which potential lenders check before they decide whether to lend to you or not. This is a myth! The truth is that you have a credit report which is a detailed record of your credit history. Potential lenders will access this report and score you based on their in-house criteria and make a decision whether to lend to you. So there is not one universal credit score.
3. Clearing your credit card balance each month is bad for your credit rating - in reality the opposite is likely to be true as it is evidence that you can repay your debts, so posing less of a risk to potential lenders. You are better off clearing your balance each month so avoiding interest rather than leaving money on your credit card and risk missing repayments, which would be bad for your credit rating.
4. Only potential lenders check your credit report - utility companies will also check your credit rating before providing services to you as they want to check your ability to pay your bills.
5. There's a credit blacklist - there is no credit naughty list which lenders check before lending. They take each case on its own merit and check your credit report.
6. Checking your credit report affects your credit scores - no no no no no no no! This has never been the case. If I had a pound for every time I'd heard this myth I'd have no need for credit.
7. If you have a bad credit rating you'll never get credit - your credit report changes as your circumstances change and in time (after six years) your worst misdemeanours will fall off your credit report. But there are lots of proactive things you can do in the meantime to improve your credit rating. Read my article '16 way to boost your credit score and get credit'.
8. Those who've never borrowed will have a good credit score and will easily get credit - when lenders check your credit report they are assessing your ability to repay any potential borrowings. If you have no credit history they can't assess how reliable you will be in repaying. In fact those without any credit history may even be rejected outright. I personally know someone who struggled to get a mortgage because he'd never had a credit card or loan despite being in his thirties.
9. People living at the same address as you affect your credit rating - this is not true. Just because you live at the same address as someone or indeed share a surname with them their credit rating doesn't affect yours and vice versa. The only way someone can impact your rating and vice versa is if you become financially connected. Ways of becoming financially connected include applying for loans and other forms of credit together or having joint bank accounts, utility bills or a joint mortgage.
10. Previous occupants of your address can affect your credit rating - following on from point 9 above, this could only happen if your had a financial connection with the previous occupant.